Real Estate Math
A Hawaii property generates $9,000/month in net income. If the owner wants a 7.5% cap rate return, what is the property value?
AA. $1,200,000
BB. $1,440,000✓ Correct
CC. $1,350,000
DD. $1,260,000
Explanation
Annual NOI = $9,000 × 12 = $108,000. Value = $108,000 / 0.075 = $1,440,000. To solve this, multiply the relevant values: $9,000 at 7.5%.. The correct answer is B. $1,440,000.. This is a common calculation on the Hawaii real estate exam.
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